MONDAY MARKET CLOSE: Traders lose heart as deal slips away

DOMINIC JEFF

AstraZeneca dragged the top flight lower as the company’s quick rejection of Pfizer’s “final offer” seemed to leave its takeover prospects dead in the water.

With Astra’s US suitor saying it will not go hostile or pay more than £55 a share, the stock slumped 11 per cent, down 536p at 4,287.5p.

The news had a disheartening effect on the wider market, although the FTSE 100 narrowed its losses during the afternoon to close just 11.26 points lower at 6,844.55.

Jasper Lawler, market analyst at CMC, said: “The failure of the Pfizer-AstraZeneca deal has added to the bad feelings in markets as a certain premium had been built into prices with the belief this mega-merger could bring about a new wave of M&A. With the AT&T - DirecTV deal in the US pushing ahead, Europe is lacking its own role-model for future mega-deals.”

In the pharma sector, shares in GlaxoSmithkline were also lower, down 1.5 per cent at 1,620p. But Shire gained 2.7 per cent at 3,353p.

London’s big miners were impacted by lacklustre figures from the Chinese housing market, with Rio Tinto off 61.5p at 3,225p and BHP Billiton 11p lower at 1,942p.

And shares in Vodafone were lower for much of the session as AT&T’s weekend deal to buy satellite broadcaster DirectTV appeared to reduce the chances of a bid from the US telecoms firm. But Vodafone recovered to finish unchanged at 217.15p.

Banking stocks also showed signs of weakness as the Bank of England hinted that it may have to tighten policy in the face of rising house prices. Barclays was down 2.6p to 239p and Standard Chartered was off 2.5p at 1,333.5p.

Outside the top flight, outsourcing group Mitie was 7.3p higher at 318.3p after it beat forecasts with a 4.3 per cent rise in full-year profit.